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Europe ups the ante on regulation

Will Europe set the tone for tech regulation globally?

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Europe showed it is not afraid to get tough on Big Tech, said Adam Satariano in The New York Times. After years of chasing after the biggest tech firms through antitrust courts, European lawmakers last week hammered out final details of the Digital Markets Act, "the most sweeping piece of digital policy since the bloc put the world's toughest rules to protect online data into effect in 2018." When the law is implemented later this year, it could "reshape app stores, online advertising, e-commerce, messaging services, and other digital tools." Apple will have to let European users download apps from other companies' stores and let apps offer payment systems that bypass its own. Amazon would be barred from using data collected from third-party sellers to make competing products; targeted ads — immensely lucrative for Meta and Google — would be prohibited without users' consent. Companies that violate the rules could face a fine of up to 10 percent of their global annual revenue. 

Lawmakers have threatened tech crackdowns for years, said Therese Poletti in MarketWatch, but this one "has some real teeth." A 10 percent fine for Apple, for instance, would be $37 billion. Europe has already fined Google "nearly $10 billion in three separate actions," so it might consider future transgressions as a second offense, bumping the penalty up to 20 percent (or $52 billion). That should get Google's attention. It's a welcome overhaul, said the Financial Times in an editorial, that puts "tech 'gatekeepers' in the same camp as other 'utility' sectors such as finance, energy, and telecoms," which must abide by an extensive set of regulations "because of their size and importance to consumers' daily lives." The other big takeaway is that "Big Tech's ability to lobby lawmakers is on the wane"; this bill sailed through Brussels with "unusual ease and speed."

U.S. lawmakers have put forward many of the same proposals, said Cristiano Lima in The Washington Post. Yet what Congress is actually able to pass is unlikely to come close to "matching the sheer scope of Europe's incoming rules." Within the Biden administration, there is "continued disagreement about how to approach antitrust reforms," said Leah Nylen and Samuel Stolton in Politico. Officials have tried to protect American businesses, hailing a new pact to keep personal data flowing between the U.S. and EU, a deal that was seen as essential for Meta and Google. But White House officials "conspicuously avoided the elephant in the room," tech regulation.

At this point, said Rochelle Toplensky in The Wall Street Journal, fighting Europe "is probably futile." Apple, Facebook, Google, and Amazon "all have significant European sales," and they could seek to delay some of the more costly requirements. However, Microsoft's experience fighting European antitrust actions in the early 2000s offers an instructive example: "Things only eased off once the company started behaving as if it believed European officials were right." Rather than risk further antagonizing the bloc, settling for "a détente in Europe could prove valuable globally, otherwise the hits will likely keep coming."

This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.

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